Shares of Facebook owner Meta Platforms (NASDAQ:) surged Thursday after the social media giant posted better-than-expected fourth-quarter earnings and announced a $40 billion share buyback program. .
The company reported fourth-quarter earnings per share (EPS) of $1.76, down 52% from the year-ago quarter. According to Refinitiv, revenue for the three months ended Dec. 31 was $32.17 billion, down 4% year-on-year but ahead of consensus estimates of his $31.53 billion.
Better-than-expected reports, fundamentals improve
The report shows Meta’s sales declined for the third straight quarter, while costs and expenses increased 22% year-over-year to $25.8 billion. The social media business also reported 2 billion daily active users (DAU) in the quarter. This slightly exceeded analyst expectations of his 1.99 billion. According to StreetAccount, there were 2.96 billion monthly active users (MAUs) during this period, just below the estimated 2.98 billion.
Meta’s average revenue per user (ARPU) was reported at $10.86, beating the expected $10.63 per share. The tech giant reported restructuring costs for its app family and reality lab business at $3.76 billion and $440 million, respectively.
Looking ahead, the company expects revenues in the range of $26 billion to $28.5 billion in the first quarter of 2023, compared with analyst estimates of $27.1 billion and revenues of $279 billion in the first quarter of 2021. Billion dollars. If the company’s earnings hit the high end of its forecast range, it would mark the end of consecutive year-over-year declines.
Meta CEO Mark Zuckerberg said in a statement:
“Our community continues to grow and we are pleased with the strong engagement across our apps. I’m putting ”
As of December 31, 2022, the company said it had 86,482 employees, up 20% year-on-year. But as Meta announced last November, more than 11,000 of those employees will be laid off.
Meta also approved a $40 billion share buyback program on Wednesday after buying $27.9 billion worth of shares in 2022. As investors see this, one of the main reasons behind his Meta stock surge today is believed to be his use of stock buybacks. This demonstrates Zuckerberg’s willingness to focus on shareholder value.
Still betting big on the metaverse
Meta also reduced its capital spending outlook for the current fiscal year by approximately $4 billion at the midpoint. According to the company, “substantially all” of its estimated $30 billion to $33 billion in capex this year will go to its legacy family of apps units.
Zuckerberg also addressed the company’s investment goals on Wednesday’s conference call, describing 2023 as “the year of efficiency.” His remarks come after the company’s earlier comments that it plans to pour billions into its Metaverse business in a tough macroeconomic environment that has forced investors to focus on short-term profitability. I’m here.
Exactly one year ago, after rebranding and becoming a metaverse-first company, Meta reported its first drop in Facebook’s DAU on a quarterly basis. The disappointing report raised concerns that the platform’s days as a leader in social media were coming to an end. The total amount decreased by about $600 billion.
However, recent events suggest that last year’s Meta recession may be short-lived. Facebook has added new users every last four quarters, reaching a total of 2 billion DAU. Meta’s traditional Blue app remains at the center of its operations, according to a previous WSJ report. , said it contrasts with expectations that it is generating as much as 50% of the return.
According to the WSJ, Meta may finally be “starting to see the road to recovery” after Apple’s ad revenue slump the company has seen since amending its app tracking privacy policy. allowed the company to “improve its ad targeting system to make better predictions based on less data,” a big win in its “plan to overcome privacy shifts.”
Meta executives reportedly notified employees last year that they expected to recover from Apple’s policy change as early as the same quarter.
Alex Schultz, Meta Marketing Chief and VP of Analytics, reportedly said at an internal meeting:
In late 2021, Apple (NASDAQ:) announced the “App Tracking Transparency” feature. This is a privacy policy that allows a user to avoid tracking when using the app on her Apple device. The move would be a major blow to the ad-reliant company, with Meta saying last year that 2022 sales would cost him more than $10 billion.
overview
Meta Platforms shares are seeing a massive rally on Thursday after Facebook’s leadership finally delivered a string of quarterly results and actions that pleased investors. Shares traded at their highest level since July 2022 after better-than-expected results.
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Shane Neagle is the EIC at The Tokenist. Check out The Tokenist’s free newsletter, Five Minute Finance, for weekly analysis of the biggest trends in finance and technology.
